Aerospace & Defense

Airbus Reaffirms Delivery Targets, Changes Accounting for A380

At its annual media briefing Monday in Hamburg, Airbus stuck with its 2016 delivery estimates for its A320neo and A350 aircraft, even though first-quarter deliveries put the company in a pretty large hole. The aircraft maker also said it would shift some overhead costs for its superjumbo A380 to its A320 program.

Airbus reiterated its plans to deliver more than 50 A350s in 2016. The company delivered just 14 in 2015, and production this year has not improved much. In the first four months of 2016. Airbus has delivered just six.

The major hang-up here is the availability of seats from supplier Zodiac. According to the company, there are 40 A350s at various states of completion at the final assembly plant in Toulouse.

The A320neo has run into production issues due to problems with the new geared turbo-fan engine from United Technologies Corp.’s (NYSE: UTX) Pratt & Whitney engine division. The company has not set an annual target for deliveries of this narrow-body jet, but it expects to ramp production to 50 a month by early next year, rising to 60 a month by the middle of 2019.

The company also said on Monday that it is revising its accounting on the A380 superjumbo jet by assigning some overhead costs to the A320 program. The A380 has only recently reached a break-even level after years of losses and the company would like to maintain that achievement.

According to Reuters, a fourth assembly line for the A320neo will be housed in a building in Hamburg that had been running an A380 line. That allows Airbus to reassign some overhead costs on the A380, maintaining that break-even position it took so long to reach.

Both Airbus and Boeing Co. (NYSE: BA) face some problems this year. Last Friday, just ahead of the three-day holiday weekend, Boeing announced a delay in delivering the first batch of the new KC-46 military tanker to the U.S. Air Force. The company did not say anything about taking any additional charges due to the delay, but those charges seem inevitable.

Airbus delivered 635 passenger jets in 2015 and expects to deliver more than 650 in 2016. Boeing delivered 762 new jets in 2015 and expects to deliver 740 to 745 this year.